According to a new estimate released on Monday by money market research firm Wrightson ICAP, the US Treasury may be able to fund government operations through the first half of January without raising the debt ceiling.
In a note to clients, Wrightson stated that based on the Treasury's debt issuance plans, the department should be able to go well beyond the new Dec. 15 deadline set by Treasury Secretary Janet Yellen last week. She stated that "under certain scenarios," the Treasury would lack sufficient resources and risk default after transferring $118 billion to the Highway Trust Fund on December 15.
Yellen urged Congress to raise or suspend the debt ceiling as soon as possible, but a longer deadline would give Democrats more leeway as they try to pass a $1.75 trillion social and climate spending bill without Republican votes.
"Our own updated base case is that the Treasury will have enough resources to meet its obligations until the first half of January," Wrightson wrote. "There is some risk that it might run into trouble in the final couple of days of December, but there is also some chance that the drop-dead date might not arrive until after the mid-January non-withheld individual income tax deadline."
The Treasury, according to Wrightson, is hoping that the debt ceiling issue will be resolved by mid-January, but it has begun to fine-tune its bill issuance in case it is "still on a short leash" in the second half of December.
It stated that a 35-day cash management bill due to be sold on Tuesday would become due on December 31, allowing the Treasury to accommodate the settlement of end-of-year note and bond auctions.
In the coming weeks, the firm anticipates a slew of "off-cycle" cash management bill issuances.